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[2024] ZANCHC 15
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J.S.B v B.B N.O and Others (2048/2022) [2024] ZANCHC 15 (16 February 2024)
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Certain
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IN THE HIGH COURT OF
SOUTH AFRICA
NORTHERN CAPE
DIVISION, KIMBERLEY
Case No:
2048/2022
Heard on:
20/10/ 2023
Delivered on:
16/02/2024
Reportable: YES / NO
Circulate to Judges: YES
/ NO
Circulate to Magistrates:
YES / NO
Circulate to Regional
Magistrates: YES / NO
In
the matter between:
J[...]
S[...] B[...]
Applicant
and
B[...] B[...] N.O
(in
her capacity as trustee of W[...] F[...]
Trust)
First Respondent
DAVID FRANCOIS ROUX
N.O
(in
his capacity as trustee of W[...] F[...] Trust)
Second Respondent
PHILLIPUS
JACOBUS PETRUS COETZER N.O
(in
his capacity as trustee of W[...] F[...]
Trust)
Third Respondent
MASTER
OF THE HIGH COURT, KIMBERLEY
Fourth Respondent
JUDGMENT
MAMOSEBO J
[1]
The central issue in this application is the interpretation of the
provisions
of clause 5.3 of the trust deed of the W[...] F[...] Trust
(the Trust) pertaining to the right to appoint substituting trustees.
[2]
The following facts are common cause. The applicant, Mr J[...]
S[...]
B[...], is a farmer at De Hoek, Prieska, in the Northern Cape.
He was married to the first respondent, Ms B[...] B[...] N.O.
out of community of property which marriage was dissolved on 04 May
2021. The applicant founded the trust on 08 May 2002
with his
ex-wife Ms B[...] and one Mr Ockert Gerbrandt Olivier as trustees.
The Master issued the initial trustees with Letters
of
Authority on 20 June 2002 annexed to the papers as “JB2”.
[3]
The Trust Deed, “JB1”, makes provision for situations
when
a trustee ceases trusteeship. This can happen upon
resignation by giving notice to the co-trustees and the Master and
when
his or her estate is sequestrated. Despite Olivier having
served a resignation letter dated 11 May 2004 on the trustees, Mr
and
Mrs B[...] as the remaining trustees, it is unclear whether the
Master was notified of his resignation. The applicant’s
estate was finally sequestrated on 02 July 2021 leaving the first
respondent as the sole trustee. The trust deed requires
a
minimum of three (3) and a maximum of five (5) trustees at all times.
The applicant, the first respondent and their three
major
children are the beneficiaries of the Trust.
[4]
On 02 March 2022 the first respondent resolved to appoint the second
respondent,
Mr David Francois Roux, an attorney in Port Elizabeth,
and the third respondent, Mr Phillipus Jacobus Petrus Coetzer, an
attorney
in Pretoria, as substituting trustees. On 29 June 2022
the Master issued them with Letters of Authority to act as trustees
of the W[...] F[...] Trust. The Master of the High Court
Kimberley is cited as the fourth respondent but no cost order is
sought against him.
[5]
In his notice of motion the applicant is seeking the following relief
which is opposed by the first, second and third respondents:
5.1
That the resolution taken by the first respondent on 02 March 2022
nominating
the second and third respondents as trustees of the W[...]
F[...] Trust be declared unlawful and invalid and set aside;
5.2
That the Letters of Authority issued by the fourth respondent on 29
June 2022,
certifying that second and third respondents are
authorised to act as trustees of the W[...] F[...] Trust, be reviewed
and set
aside;
5.3
A declarator that the applicant is authorised and entitled, in his
discretion,
to nominate substituting trustees in terms of paragraph
5.3.1 of the Trust Deed of the W[...] F[...] Trust;
5.4
That the first respondent and such further respondents (second and
third) opposing
the application be ordered to pay the costs of the
application, jointly and severally.
[6]
From clauses 5.2 and 5.3 the trust deed provides
[1]
:
“
5.2
There shall at all times be THREE (3) and at most FIVE (5) trustees
in office.
5.3
The serving/incumbent trustee(s) is entitled to nominate and appoint
additional
trustee(s), subject thereto that J[...] S[...] B[...] (ID
number 5[...]) shall have the right and power/capacity/authority to:
5.3.1
By/In terms of a will or during his lifetime by another written
document
appoint a new trustee in the stead/place of any trustee or
trustees who passes away or whose office is terminated in terms of
5.6
and subject to the maximum number of trustees in terms of 5.2,
appoint one or more additional trustee(s); and
5.3.2
By/In terms of a will or during his lifetime by another written
document
appoint any other person or persons (including a person or
persons that may be or become a beneficiary) to exercise the rights
afforded J[...] S[...] B[...] (ID number 5[...]) in terms of 5.3.1
and this sub-paragraph/the rights pursuant to 5.3.1 and this
sub-paragraph.”
[7]
The applicant asserts that Clause 5.3.1 of the trust deed clothes him
alone with the authority to appoint substituting trustees. To
the contrary, the first respondent maintains that, by virtue
of his
sequestration, he is no longer capable of filling the vacancies and
that a trustee in his insolvent estate had to approach
the Master for
his substitution.
Points
in limine
[8]
The respondents objected
in limine
to the
locus standi
of the applicant, who is an unrehabilitated insolvent. The
second point
in limine
is that the applicant has no
locus
standi
by virtue of not being a trustee anymore after being
declared insolvent. The contention by the respondents is that
the applicant
should have been assisted by a trustee of his estate.
[9]
The applicant’s argument is that his authority to fill
vacancies
at clause 5.3.1 is vested in his personal capacity.
Section 12 of the Trust Property Control Act
[2]
stipulates:
“
Trust
property shall not form part of the personal estate of the trustee
except in so far as he as trust beneficiary is entitled
to the trust
property.”
As already stated the
applicant is the founder of the trust.
[10]
Section 23(6) of the Insolvency Act
[3]
provides:
“
(6)
The insolvent may sue or may be sued in his own name without
reference to the trustee
of his estate in any matter relating to
status or any right in so far as it does not affect his estate or in
respect of any claim
due to or against him under this section, but no
cession of his earnings after the sequestration of his estate,
whether made before
or after the sequestration shall be of any effect
so long as his estate is under sequestration.”
This
aspect is made clearer at para 4.3.1 dealing with proceedings which
may be brought or defended personally by an insolvent where
Sharrock
et
al
,
[4]
lists these instances under which an insolvent may sue or be sued in
his own name and without reference to the trustee of his estate
in
terms of s 23(6) – 10.
[11]
The second point
in limine
: Applicant as an insolvent lacks
locus standi
. In as far as this point is concerned, the
respondents contend that since the applicant is no longer a trustee
by virtue
of being declared insolvent, he lacks the necessary
locus
standi
to challenge actions of the current trustees. To
counter this challenge, the applicant maintains that the right to
appoint
substituting trustees vests in him in his personal capacity
having instituted these proceedings enforcing his personal right.
[12]
At paras 30 and 42 of their opposing affidavit the respondents argue
that the applicant’s
trustee in the insolvent estate should
have applied to the Master of the High Court to appoint that trustee
in the applicant’s
stead, which was not done.
[13]
The settled principle regarding an insolvent's
locus
standi in judicio
is that he/she/it is not affected by his/her/its sequestration.
Phrased differently, the fact that a person is insolvent
does
not necessarily preclude him/her/it from litigating. What is
affected is his/her/its ability to litigate in respect
of the assets
of the estate. See
Grevler
v Landsdown & ‘n ander NNO
[5]
.
The
respondents contend that, since the applicant is not only the founder
and trustee but also a beneficiary of the Trust, any benefit
which he
derives or would derive would be for his insolvent estate, the
argument by the applicant that the proceedings do not pertain
to his
estate, is wrong and bad in law. The respondents further argued
that the applicant has been removed as a trustee and
cannot be
dictating to the trust as to how it should function.
[14]
I share the sentiment expressed by the court in
Marais
v Engler Earthworks (Pty) Ltd; Engler Earthworks (Pty) Ltd v
Marais
[6]
which
followed
Grevler
when
it said:
“
The
correct starting point to my mind is the fact that prior to the
sequestration of his estate, the applicant had full locus standi
in
iudicio. His capacity to litigate was affected by the
sequestration to the extent only provided for by the Act. In
such regard, s 20(1) states specifically that the effect of the
sequestration order is to divest the insolvent of his estate, and
to
vest it in the Master until a trustee is appointed and thereafter in
the trustee. Section 23(1) states that subject to the provisions
of s
23 and s 24…, all property acquired by an insolvent shall
belong to his estate. The Act further recognises persona
standi
in iudicio of the insolvent in specific circumstances: the insolvent
may sue or be sued in his own name without reference
to the trustee
in any matter relating to status or any right insofar as it does not
affect his estate or in respect of any claim
due to or against him
under s 23 (s 23(6)); the insolvent may for his own benefit recover
any pension to which he may have been
entitled for services rendered
by him (s 23(7)); the insolvent may for his own benefit recover any
compensation for any loss or
damage he may have suffered by reason of
any defamation or personal injury (s 23(8)); subject to the rights of
the trustee to the
insolvent's income, the insolvent may recover for
his own benefit the remuneration or reward for work done or for
professional
services rendered by him after the sequestration of his
estate (s 23(9)).
I
do not see these particular instances of locus standi of an insolvent
to be exhaustive. The Act nowhere specifically deprives
the
insolvent of locus standi. In the absence of such provision, an
insolvent retains general competency to sue and be sued
(Grevler v
Landsdown en 'n Ander NNO
1991 (3) SA 175
(T) at 177H).”
[15]
This, in my view, is not a case referring to the insolvent’s
estate but essentially
about the assets of the trust not the assets
of the insolvent estate. The fact that the applicant is an
unrehabilitated insolvent
does not automatically preclude him from
litigating in his own name without referring to the trustee of his
estate. His insolvent
estate and the estate of the trust are
separate and cannot be conflated. The applicant has the
necessary legal standing to
challenge the action by the respondents.
It is therefore my
finding that the applicant has the necessary
locus standi
.
It
follows that the objections
in
limine
stand to fail
.
[16]
Central to this application is the interpretation of certain clauses
of the trust
deed on which this case turns. The question to be
answered is whether or not the trust deed conveyed an intention that
the
applicant is clothed with the power to nominate substitute
trustees.
[17]
Wallis JA in
Natal Joint Municipal Pension Fund v Endumeni
Municipality
2012
(
4) SA 593
(SCA) at para 18 made this
observation:
[18]
Interpretation is the process of attributing meaning to the words
used in a document,
be it legislation, some other statutory
instrument, or contract,
having
regard to the context provided by reading the particular provision or
provisions in the light of the document as a whole
and the
circumstances attendant upon its coming into existence.
Whatever the nature of the document, consideration must be
given to the language used in the light of the ordinary rules
of
grammar and syntax; the context in which the provision appears; the
apparent purpose to which it is directed and the material
known to
those responsible for its production. Where more than one meaning is
possible each possibility must be weighed in the
light of all these
factors. The process is objective, not subjective. A sensible meaning
is to be preferred to one that leads to
insensible or unbusinesslike
results or undermines the apparent purpose of the document….
The 'inevitable point of departure
is the language of the provision
itself', read in context and having regard to the purpose of the
provision and the background
to the preparation and production of the
document.”
[18]
The same interpretive approach was followed in
Bothma-Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
2014
(2) SA 494
(SCA) at para 12. Wallis JA said in
Bothma-Batho
at par 25:
“
Interpretation
is no longer a process that occurs in stages but is ‘essentially
one unitary exercise’. Accordingly
it is no longer
helpful to refer to the earlier approach.”
Emphasis, in my view,
seems to be that the correct approach of interpreting is not to limit
yourself to the literal meaning of the
words but to consider them
contextually whilst simultaneously considering the circumstances
which brought the document into existence.
[19]
It is common cause that at the time when the applicant founded the
Trust he was married
to the first respondent. It was meant to
benefit him, his wife and children who are beneficiaries. It is
further common
cause that the Trust had to comprise a minimum of
three (3) and a maximum of five (5) trustees at all relevant times.
It
is this omission to have the required number of trustees
that has led to the first respondent’s action to resolve to
nominate
the second and third respondents. The question is
whether the resolution taken by the first respondent can withstand
scrutiny
when interpreting clauses 5.3.1 and 5.3.2.
[20]
Clause 5.3 gives the serving or incumbent trustees the power to
nominate and appoint
additional trustee(s)
subject to
the
applicant having the right or power to
appoint a new trustee
where
a trustee has died or had his office terminated. In as far as
5.3.2 is concerned, the applicant is still alive and there
is no will
that has to come to the fore. He has also not drafted another
written document that needs interpretation. My
focus will
therefore be limited to clause 5.3.1 despite the parties relying on
both clauses 5.3.1 and 5.3.2.
[21]
It is salutary to remind ourselves that a Trust Deed is a contract
and the principles
of interpretation of contracts are applicable to
it. Further, it is to be interpreted as at the time of its
execution.
In this regard see
Mohamed
and Others NNO v Ally
[7]
.
[22]
Importantly, in interpreting clause 5.3.1, regard must be had to the
circumstances
in existence when the trust deed came into being, the
material that was known to the applicant as the founder of the trust
deed,
the background to the preparation of the trust deed and the
purpose to which the establishment of the trust deed was directed.
What is known is that the applicant was married to the first
respondent and they, together with the children born out of this
marriage, formed their family unit. The purpose of this Trust was
meant to benefit their family with the applicant retaining the
right
to control who participates in this Trust either as trustees or
beneficiaries.
[23]
The submission on behalf of the respondents was that the trust deed
envisaged a situation
in future where the Trust may be left with one
trustee and afforded such trustee the right to nominate and appoint
any further
trustee(s) of his/her choosing. Therefore, clause
5.3 bestows upon the first respondent the right to appoint additional
trustees
of her choosing. It is further contended by the
respondents that there is no conditional rider/proviso on this right.
The
respondents invoked
Erwee
N.O. en ‘n Ander v Erwee N.O. en Andere
[8]
which
case focused on the meaning of the words “
benoem”
and
“
aan
te stel”
contained
in the trust deed and whether or not they are used as synonyms. The
court observed that in clause 5.3(b) the phrase
“
aan
te stel” was missing. Erwee,
in
my view, is distinguishable because
in
casu,
the
words “
benoem”
and “
aan
te stel”
appear in clause 5.3 as follows:
Die
dienende trustee(s) is geregtig om bykomstige trustee(s) van hulle
keuse te benoem en aan te stel, onderheuwig daaraan dat J[...]
S[...]
B[...] die reg en bevoegdheid sal hê om:…”
[24]
The trust deed states that the nomination and appointment of
additional trustees
is “
subject to”
(“
onderhewig
aan
”) the applicant having the right and power/authority
to….
The contention by the
respondents can therefore not be correct that there is no
rider/proviso to the right. It is clear that
the first
respondent’s resolution resolved to fill the vacancies and was
not merely appointing additional trustees in terms
of clause 5.3.
She stated in her affidavit that the appointments of the second
and third respondents were linked to the sequestration
of the
applicant and the resignation of Olivier. Her powers in my view
are limited to the appointment of additional trustees
and not to fill
vacant positions created by the applicant and Olivier.
[25]
A consequence of applying the applicant’s interpretation of
clause 5.3 might
well be that despite his sequestration he still has
the right to vet who the trustees are to be appointed to the W[...]
F[...]
Trust which accords with the broad object of the trust, which
is to advance the interests of the beneficiaries of the trust.
[26]
In my interpretation of the relevant clause of the trust deed, I
further took cue
from the statement by Wallis JA in
Endumeni
at
para 26:
“
[26]
…[I]n most cases the court is faced with two or more possible
meanings that are to a greater
or lesser degree available on the
language used. Here it is usually said that the language is
ambiguous, although the only
ambiguity lies in selecting the proper
meaning (on which views may legitimately differ). In resolving
the problem, the apparent
purpose of the provision and the context in
which it occurs will be important guides to the correct
interpretation. An interpretation
will not be given that leads
to impractical, unbusinesslike or oppressive consequences or that
will stultify the broader operation
of the legislation or contract
under consideration.”
[27]
I therefore conclude that the interpretation of the applicant is
correct and that
the interpretation by the respondents cannot be
sustained. Schutz JA in
Mohamed
and Others NNO v Ally
[9]
reiterating
the rule that a trust speaks from the time of its execution: see
Moosa
and Another v Jhavery
1958 (4) SA 165
(D) at 169. In my view, the aforesaid,
contextually, support the contention by the applicant that whereas
the incumbent trustees
may appoint the additional trustees
substituting those whose terms have ended, in this instance, the two
vacancies created by the
applicant’s sequestration and
Olivier’s resignation, the applicant is not divested of his
authority to fill vacancies.
Notwithstanding that the first
respondent is the incumbent trustee she could not fill the vacancies
as allowing her to do
so would be in direct conflict with the
provisions of clause 5.3.1.
[28]
On the question of costs there is no reason why costs should not
follow the result.
[29]
In the result, the following order is made:
1.
The resolution by the first respondent on 2
March 2022 nominating the second and third respondents as trustees of
W[...] F[...]
Trust are declared unlawful and invalid and hereby set
aside.
2.
The Letters of Authority issued by the
fourth respondent on 29
June 2022, certifying that the second and third respondents are
authorised to act as trustees of the W[...] F[...] Trust, are
reviewed and set aside.
3.
The applicant is authorised and entitled,
in his discretion, to nominate substituting trustees in terms of
paragraph 5.3.1 of the
Trust Deed of the W[...] F[...] Trust.
4.
The first, second and third respondents are
ordered to pay the costs of the application jointly and severally,
the one paying the
other to be absolved.
MAMOSEBO J
NORTHERN CAPE DIVISION
For the applicant:
Adv JJ Pretorius
Instructed by:
Muller & Muller
Attorneys
c/o
Engelsman Magabane Inc
For the 1
st
- 3
rd
respondents:
Adv J De Beer
Instructed by:
Stuart Laubscher Inc
c/o
Roux Welgemoed & Du Plooy
[1]
5.2
Daar sal te alle tye DRIE (3) en hoogstens VYF (5) trustees in amp
wees.
5.3
Die dienende trustee(s) is geregtig om bykomstige trustee(s) van
hulle keuse te benoem en aan te stel onderhewig daaraan dat
J[...]
S[...] B[...] (ID nr 5[...]) die reg en bevoegdheid sal hê om:
5.3.1 Kragtens of
gedurende sy leeftyd in ‘n ander skriftelike document ‘n
nuwe trustee of trustees aan te stel in
die plek van enige trustee
of trustees, wat te sterwe kom of wie se amp beëindig word in
terme van 5.6 en onderhewig aan
die maksimum aantal trustees in
terme van 5.2, een of meer bykomstige trustee(s) aan te stel; en
5.3.2 Kragtens
testament of gedurende sy leeftyd ‘n ander skriftelike
dokument enige ander persoon of persone (insluitende
‘n
persoon of persone wat een van die begunstigdes mag wees of word)
aan te stel om die regte wat J[...] S[...] B[...]
(ID nr 5[...])
ontleen aan 5.3.1 en hierdie sub-paragraaf uit te oefen.
[2]
57
of 1988
[3]
24
of 1936
[4]
Sharrock
et al, Hockly’s Insolvency Law (ninth edition) at 66
[5]
1991
(3) SA 175
(T) at 177
[6]
1998
(2) SA 450
(E) at 453C - G
[7]
1999
(2) SA 42
(SCA) at 49I - J
[8]
[2006]
1 All SA 626 (O)
[9]
1999
(2) SA 42(SCA)
at 49I